Financial Planning 101 For 50 Year Olds

March 23, 2023

In this highlight, Brian and Bo break down what you should focus on financially in your fifties.

Check out the full episode, “Financial Planning 101 (By Age) 2023 Edition.


Let’s kind of move into the 50s. This is what I’m quickly approaching. The celebration or panic. Here’s what I think is interesting on this is that I didn’t bring this up in the 40s because I didn’t want to be the downer of the situation. But there is a lot of research on happiness that the most unhappy decade is your 40s. Like, surprise, I didn’t share that with them. Now that you’re in your 50s, this is actually where you see happiness. Kind of spiked up to almost like, you know, young adult levels, which is kind of amazing. So this is one of those points where hopefully you kind of know who you are, what makes you happy and you want to have that moment to kind of absorb it, do it in a right way.

But I am worried there are some people that maybe they didn’t say like they should have. They’re behind. I’ve seen some content creators are actually doing content with like 52 year olds, 53 year olds, that have nothing to their name. And it’s scary. It is a straight on all hands on deck panic because you start realizing your mortality as well as your desire to leave the workforce or probably not even desire, just you’re going to be forced to leave the workforce. If you don’t have a soft landing figured out of what the next chapter of your life looks like, you can see how this could really mess mess with you mentally. So a plan and prepare accordingly. It’s really interesting. In your 20s and 30s and 40s, that’s where a lot of the work happens. And then in your 50s, there’s where a lot of the decision making happens. And you want to make sure am I on the fence to be able to make the celebration decisions or the panic decisions. We hope that you can make the celebration decisions. One of the ways to help protect that is when you think about your cash flow in your 50s and you think about your kids, the idea is that we ultimately want our kids to fly out of the nest. We want them to be able to become. Also, efficient human beings on their own. Well, in our 50s, maybe the first time that we’re faced with this, how much do I help, how much do I not help, how do I help them get on their feet, but how to not prop them up when you have adult children. The goal is to get them to the level where they don’t have any economic outpatient care as soon as possible. Because one of the things that can be absolutely detrimental to your retirement well-being is your kids never actually getting out of the house. Yeah. One of those, I was having a conversation with my daughter and she was kind of rebuking something I wanted to do for her and I said, look, I said, don’t, you’re fighting me over the wrong things. I said, if you want to do me right in the long term, I said, don’t be part of that horrible statistic because I said, everybody gets focused on the first time you’re a millionaire, 80% of these people are first generation. The only way that possibly could be true is that, and we know this, these are actually the real stats. 70% of wealth for millionaires disintegrates by the second generation, meaning the kids. 90% of the wealth that completely disappears by the grandkids, that’s sad to me.

This is the stage where if you can get away from doing economic outpatient care and let your kids have the skill set with money so that they’re good adults with resources, you will be setting them up for success. This sounds like rich people problems, but I think this is a truly a bad place to be where wealth is almost like, and people don’t want to hear this, but it is something that hangs around the neck and the shoulders of successful children. We see so many kids that come from successful parents that just never get out of that shadow and I think a lot of it is just not understanding how do you pay forward to the next generation so they understand scarcity as well as the need and desire to build wealth for the future. One of the best ways that we can help that next generation, whether it’s modeling in ourselves, are we making wise, imprudent financial decisions? And a great example of one, in your 50s from a cash flow standpoint, you probably ought to be moving to that area where you are debt free. You’ve gotten rid of all the consumer debt and maybe now you don’t have to have car loans anymore. Even now you don’t have a mortgage. Your house is paid for you actually own it yourself and you don’t have to use debt as a tool anymore. In your 50s, that ought to at least be on your eye line. You ought to at least be able to see an end to your debt life by your 50s or have a plan on how to get there shortly thereafter. Yeah, risk management wise, we want to quickly talk about insurance. Long term care insurance is something that at least goes, you know, explore, do some do diligence on and know what happens when you maybe need somebody to provide care for you. Is that going to be a family member? Is that going to be a nursing facility? You need to be thinking about those things. This might also be the decade where you graduate to self insurance on your life. You don’t need a life insurance so much. So some of your term life insurance policies actually start expiring from their lock periods. And you might be able to let these policies go if you have enough resources so that you’re not actually leaving a detriment or leaving unfunded things behind your survivors.

From an investing standpoint in our 50s, we want to start ancient in the question, is my retirement plan sound up to this point? I’ve been focusing on accumulation, accumulation, accumulation, accumulation. Starting around our 50s, we were starting to think about, okay, preservation, preservation, preservation, preservation, over the long term is the work that I’ve done up to this point, creating a scenario where my army of dollar bills can provide for me for the rest of our life in order to be able to answer that question order to know if we were at that case, we really need to know what our number is. We have a great tool, a great course available for it. If you’ve not done this, you can go check it out at learn.moneyguide.com where you can actually input your variables to see what is my number? How much do I actually need to know that my retirement plan is in sound? It is sound and can’t sustain me. Now, this is simply a spot check. This is here to help you. This does not replace stress testing a plan or having a full financial plan in place, but it least gives you an idea to know, am I on the right path and am I moving in the right direction? I think this is a great plan to give you that spot check, but without a doubt, you’re going to want to stress test your full retirement plan. This is where you only get one retirement, whereas working with a professional, we’ve worked with hundreds of people, if not thousands, to try to give them a good retirement. Been there, done that and can hopefully do it better because you just don’t know what your blind spots are. It’s bow kind of alluded to. Going from the saver and builder mentality to now you’re a consumer and spender, it’s going to do weird things to you mentally. I mean, I deal with this constantly. The next time that down market happens when you’re getting closer to retirement, you don’t get to do that default thing that 30 and 40 year old do, but that’s all right. I’m still working. I’m just saving. I’m a financial mutant. I’m powering through it. No, it’s going to hit you completely differently. It’s good if you have somebody to help you not only have the analytical decision making and the stress testing, but also the behavioral stuff so that you have a backstop so you don’t do something silly that could actually hurt your long term success.

Again, in your 50s, you also want to be thinking about your diversification and your asset location is my portfolio appropriately diversified to match not only my risk tolerance, how much can I handle, but my risk capacity, how much should I handle is this portfolio structured appropriately for where I am my life and have I thought through the asset location, if I am going to retire, if I am going to begin living off of these dollars, do I have liquidity in the right places? Do I know what accounts that I’m going to pull from? Do I have dollars in those accounts that I will be able to pull from? All these are questions you ought to be thinking about not to be looking at what it relates to your investment portfolio in the 50s decade. Well, you’re also you’re transitioning from get wealthy to stay wealthy. It’s not the same skill set, by the way. It’s because a lot of people is back to that transition of mentality, but also of risk. A lot of people will think, hey, I’ll just keep powering through it, but that’s the part where you can get yourself. You can run up the score after you’ve already won the game of life financially. You just need to be very aware of what you need, why you need it, so that you can do the appropriate plan that reflects all that. From a tax planning perspective, as you get into your 50s, now you might be thinking about some optimization strategies. Perhaps you retired early before a traditional age 65, and you’re able to do things like Rothkin versions in lower tax brackets so that you minimize the tax you pay over the long term. There are also some key milestones that you’ll hit in your 50s. At the very beginning of the decade, when you turn 50, you can start saving more in your IRAs and into your 401ks. If you have a 401k and you retire after a 55th birthday, you can get access to those dollars. Maybe that makes retirement possible. After age 59.5, you get access to all of your retirement accounts, IRAs, Roth IRAs, 401ks. Understand the implications of each of those dates so that you don’t accidentally trip over a tax trip wire that you don’t want to trip over. That leads to a state planning, which is one. It is a carryover from the 40s and the fact that you get complicated at this point. I don’t want you to overlook it because you go any time to process because this is going to be the decade where you’re likely going to see words like revocable trust, healthcare directives. You’re going to need to have some pretty big discussions with loved ones on what this means for the future. Asset titling, there’s huge mistakes I see people make where the parent will just slap them on an account statement or just go down and add them to the deed of the proctorial estate. These are mistakes you need to actually have a plan. Don’t be in a reactionary standpoint where you’re playing defense where you’re just when you find out you maybe get a health thing that scares you and you decide you’re driven to action. It actually needs to be a consolidate plan that works with all of your financial assets. Not just, hey, I’m scared about this, so I’m just going to go make these big knee jerk reactions. That is a disaster. Pay attention to your estate plan in your 50s.

For more information, check out our Net Worth Tool. This power-packed tool walks you through what financial metrics to track, calculates your progress, highlights successes, reveals areas that need more attention, and shows your growth over time automatically.



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